Out-Law News | 31 Jul 2014 | 10:58 am | 1 min. read
The EBRD’s board, which represents 64 shareholder nations plus the European Union and European Investment Bank, had “given clear guidance” to the bank’s management on the issue, the EBRD said.
The decision followed a declaration earlier this month by the European Council, which includes heads of state or government of EU countries, which called on EU nations “to coordinate their positions within the bank’s board. The EBRD said its management team “will be guided by this in its operational approach in Russia.”
However, the UK-based EBRD said it will continue to manage the bank’s portfolio of existing projects and client relationships in Russia and “maintain its physical presence there”.
In the first six months of 2014, 19% of the EBRD's investments were in Russia with 81% made in the EBRD's other 34 countries of operations.
During the first half of 2014, the bank said it invested a record €3.6 billion in its countries of operations “with a high transition impact and continued strong profitability”.
According to the bank, net investment in Russia to date is more than €24bn. However, the bank said earlier this year that the crisis surrounding Russia and Ukraine was “having a severe impact on the economies of the two countries and threatening to slow down the recovery in the wider EBRD region, or even bring it to a complete halt”.
The EU and the US have stepped up sanctions regimes against Russia in response to what the US has called Russia’s “continued destabilisation of Ukraine”.
In December 2013, the EBRD announced its first investment in a private equity fund tasked with making investments in financial infrastructure in Russia and the rest of the Commonwealth of Independent States.
The bank said it was acting “as a cornerstone investor”, committing $30 million to Da Vinci Private Equity Fund II, which aimed to raise between $150m and $200m to invest in small and medium-sized businesses in domestic capital market infrastructure, financial and related information technology services, as well as companies operating in the banking and insurance sectors.
In a report published in May 2014, the EBRD said: “The negative spillovers are expected to be largely contained to the neighbourhood of Russia and Ukraine under our central scenario, though several central and south-eastern European economies will also see some impact.”